Chapter 6—Process Costing MULTIPLE CHOICE 1. Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments? a. standard b. actual c. process d. job order ANS: C PTS: 1 DIF: Easy OBJ: 6-1 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Measurement, Reporting 2. Process costing is used in companies that a. engage in road and bridge construction. b. produce sailboats made to customer specifications. c. produce bricks for sale to the public. d. construct houses according to customer plans. ANS: C PTS: 1 DIF: Easy OBJ: 6-1 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Measurement, Reporting 3. A producer of ____ would not use a process costing system. a. gasoline b. potato chips c. blank videotapes d. stained glass windows ANS: D PTS: 1 DIF: Easy OBJ: 6-1 NAT: AACSB: Reflective Thinking LOC: AICPA Functional Competencies: Measurement, Reporting
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Chapter 17. Practice Exam361 Chapter 6 MC Solutions
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Chapter 6—Process Costing
MULTIPLE CHOICE
1. Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments?a. standardb. actualc. processd. job order
2. Process costing is used in companies thata. engage in road and bridge construction.b. produce sailboats made to customer specifications.c. produce bricks for sale to the public.d. construct houses according to customer plans.
4. A process costing system is used by a company thata. produces heterogeneous products.b. produces items by special request of customers.c. produces homogeneous products.d. accumulates costs by job.
6. Equivalent units of production are equal to thea. units completed by a production department in the period.b. number of units worked on during the period by a production department.c. number of whole units that could have been completed if all work of the period had been
used to produce whole units.d. identifiable units existing at the end of the period in a production department.
7. In a process costing system using the weighted average method, cost per equivalent unit for a given cost component is found by dividing which of the following by EUP?a. only current period costb. current period cost plus the cost of beginning inventoryc. current period cost less the cost of beginning inventoryd. current period cost plus the cost of ending inventory
8. The weighted average method is thought by some accountants to be inferior to the FIFO method because ita. is more difficult to apply.b. only considers the last units worked on.c. ignores work performed in subsequent periods.d. commingles costs of two periods.
9. The first step in determining the cost per EUP per cost component under the weighted average method is toa. add the beginning Work in Process Inventory cost to the current period's production cost.b. divide the current period's production cost by the equivalent units.c. subtract the beginning Work in Process Inventory cost from the current period's
production cost.d. divide the current period's production cost into the EUP.
10. The difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent unitsa. started and completed during the period.b. residing in beginning Work in Process Inventory.c. residing in ending Work in Process Inventory.d. uncompleted in Work in Process Inventory.
11. EUP calculations for standard process costing are the same asa. the EUP calculations for weighted average process costing.b. the EUP calculations for FIFO process costing.c. LIFO inventory costing for merchandise.d. the EUP calculations for LIFO process costing.
12. In a FIFO process costing system, which of the following are assumed to be completed first in the current period?a. units started this periodb. units started last periodc. units transferred outd. units still in process
13. To compute equivalent units of production using the FIFO method of process costing, work for the current period must be stated in unitsa. completed during the period and units in ending inventory.b. completed from beginning inventory, units started and completed during the period, and
units partially completed in ending inventory.c. started during the period and units transferred out during the period.d. processed during the period and units completed during the period.
14. The FIFO method of process costing will produce the same cost of goods transferred out amount as the weighted average method whena. the goods produced are homogeneous.b. there is no beginning Work in Process Inventory.c. there is no ending Work in Process Inventory.d. beginning and ending Work in Process Inventories are each 50 percent complete.
15. The primary difference between the FIFO and weighted average methods of process costing isa. in the treatment of beginning Work in Process Inventory.b. in the treatment of current period production costs.c. in the treatment of spoiled units.d. none of the above.
16. Material is added at the beginning of a process in a process costing system. The beginning Work in Process Inventory for the process was 30 percent complete as to conversion costs. Using the FIFO method of costing, the number of equivalent units of material for the process during this period is equal to thea. beginning inventory this period for the process.b. units started and completed this period in the process.c. units started this period in the process plus the beginning Work in Process Inventory.d. units started and completed this period plus the units in ending Work in Process Inventory.
17. In a cost of production report using process costing, transferred-in costs are similar to thea. cost of material added at the beginning of production.b. conversion cost added during the period.c. cost transferred out to the next department.d. cost included in beginning inventory.
18. In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is aa. debit Work in Process Inventory #2, credit Finished Goods Inventory.b. debit Finished Goods Inventory, credit Work in Process Inventory #1.c. debit Finished Goods Inventory, credit Work in Process Inventory #2.d. debit Cost of Goods Sold, credit Work in Process Inventory #2.
19. Transferred-in cost represents the cost froma. the last department only.b. the last production cycle.c. all prior departments.d. the current period only.
21. Process costing techniques should be used in assigning costs to productsa. if a product is manufactured on the basis of each order received.b. when production is only partially completed during the accounting period.c. if a product is composed of mass-produced homogeneous units.d. whenever standard-costing techniques should not be used.
22. Averaging the total cost of completed beginning work-in-process inventory and units started and completed over all units transferred out is known asa. strict FIFO.b. modified FIFO.c. weighted average costing.d. normal costing.
23. A process costing systema. cannot use standard costs.b. restates Work in Process Inventory in terms of completed units.c. accumulates costs by job rather than by department.d. assigns direct labor and manufacturing overhead costs separately to units of production.
26. A hybrid costing system combines characteristics ofa. job order and standard costing systems.b. job order and process costing systems.c. process and standard costing systems.d. job order and normal costing systems.
27. When standard costs are used in process costing,a. variances can be measured during the production period.b. total costs rather than current production and current costs are used.c. process costing calculations are made simpler.d. the weighted average method of calculating EUPs makes computing transferred-out costs
28. Which of the following is subtracted from weighted average EUP to derive FIFO EUP?a. beginning WIP EUP completed in current periodb. beginning WIP EUP produced in prior periodc. ending WIP EUP not completedd. ending WIP EUP completed
29. The cost of abnormal continuous losses isa. considered a product cost.b. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.c. written off as a loss on an equivalent unit basis.d. absorbed by all units past the inspection point.
31. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considereda. normal and discrete.b. normal and continuous.c. abnormal and discrete.d. abnormal and continuous.
32. A continuous lossa. occurs unevenly throughout a process.b. never occurs during the production process.c. always occurs at the same place in a production process.d. occurs evenly throughout the production process.
33. Which of the following would be considered a discrete loss in a production process?a. adding the correct ingredients to make a bottle of ketchupb. putting the appropriate components together for a stereoc. adding the wrong components when assembling a stereod. putting the appropriate pieces for a bike in the box
35. The cost of normal discrete losses isa. absorbed by all units past the inspection point on an equivalent unit basis.b. absorbed by all units in ending inventory.c. considered a period cost.d. written off as a loss on an equivalent unit basis.
36. The cost of abnormal continuous losses isa. considered a product cost.b. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.c. written off as a loss on an equivalent unit basis.d. absorbed by all units past the inspection point.
37. Normal spoilage units resulting from a continuous processa. are extended to the EUP schedule.b. result in a higher unit cost for the good units produced.c. result in a loss being incurred.d. cause estimated overhead to increase.
38. When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, these units are considereda. normal and discrete.b. normal and continuous.c. abnormal and discrete.d. abnormal and continuous.
39. Which of the following accounts is credited when abnormal spoilage is written off in an actual cost system?a. Miscellaneous Revenueb. Loss from Spoilagec. Finished Goodsd. Work in Process
41. Which of the following statements is false? The cost of rework on defective units, ifa. abnormal, should be assigned to a loss account.b. normal and if actual costs are used, should be assigned to material, labor and overhead
costs of the good production.c. normal and if standard costs are used, should be considered when developing the overhead
application rate.d. abnormal, should be prorated among Work In Process, Finished Goods, and Cost of Goods
42. If normal spoilage is detected at an inspection point within the process (rather than at the end), the cost of that spoilage should bea. included with the cost of the units sold during the period.b. included with the cost of the units completed in that department during the period.c. allocated to ending work in process units and units transferred out based on their relative
values.d. allocated to the good units that have passed the inspection point.
43. Dallas Co. has a production process in which the inspection point is at 65 percent of conversion. The beginning inventory for July was 35 percent complete and ending inventory was 80 percent complete. Normal spoilage costs would be assigned to which of the following groups of units, using FIFO costing?
Beginning Ending Units StartedInventory Inventory & Completed
44. Which of the following is not a question that needs to be answered with regard to quality control?a. What happens to the spoiled units?b. What is the actual cost of spoilage?c. How can spoilage be controlled?d. Why does spoilage happen?
45. Normal spoilage units resulting from a continuous processa. are extended to the EUP schedule.b. result in a higher unit cost for the good units produced.c. result in a loss being incurred.d. cause estimated overhead to increase.
46. The addition of material in a successor department that causes an increase in volume is calleda. accretion.b. reworked units.c. complex procedure.d. undetected spoilage.
47. Wood Company transferred 5,500 units to Finished Goods Inventory during October. On October 1, the company had 300 units on hand (40 percent complete as to both material and conversion costs). On October 31, the company had 800 units (10 percent complete as to material and 20 percent complete as to conversion costs). The number of units started and completed during October was:a. 5,200.b. 5,380.c. 5,500.d. 6,300.
ANS: AUnits Transferred Out 5,500Less: Units in Beginning Inventory (300) Units Started and Completed 5,200
48. Cole Company transferred 6,000 units to Finished Goods Inventory during August. On August 1, the company had 400 units on hand (35 percent complete as to both material and conversion costs). On August 31, the company had 750 units (20 percent complete as to material and 30 percent complete as to conversion costs). The number of units started and completed during August was:a. 5,600b. 5,860c. 6,000d. 6,750
ANS: AUnits Transferred Out 6,000Less: Units in Beginning Inventory (400) Units Started and Completed 5,600
49. Boggs Company started 9,000 units in March. The company transferred out 7,000 finished units and ended the period with 3,500 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units werea. 500.b. 600.c. 1,500.d. 2,000.
ANS: CBeginning Work in Process 1,500Add: Units Started 9,000
50. Williams Company started 8,600 units in April. The company transferred out 6,400 finished units and ended the period with 3,200 units that were 40 percent complete as to both material and conversion costs. Beginning Work in Process Inventory units werea. 400.b. 1,000.c. 1,280.d. 2,200.
ANS: BBeginning Work in Process 1,000Add: Units Started 8,600
51. Lincoln Company had beginning Work in Process Inventory of 5,000 units that were 40 percent complete as to conversion costs. Lincoln Company started and completed 42,000 units this period and had ending Work in Process Inventory of 12,000 units. How many units were started this period?a. 42,000b. 47,000c. 54,000d. 59,000
ANS: CBeginning Work in Process 5,000Add: Units Started 54,000Deduct: Units Transferred Out ( 47,000)
52. Douglas Company had beginning Work in Process Inventory of 6,000 units that were 45 percent complete as to conversion costs. Douglas Company started and completed 46,000 units this period and had ending Work in Process Inventory of 11,000 units. How many units were started this period?a. 46,000b. 52,000c. 57,000d. 63,000
ANS: CBeginning Work in Process 6,000Add: Units Started 57,000Deduct: Units Transferred Out ( 52,000)
53. Streete Company uses a weighted average process costing system. Material is added at the start of production. Streete Company started 13,000 units into production and had 4,500 units in process at the start of the period that were 60 percent complete as to conversion costs. If Streete Company transferred out 11,750 units, how many units were in ending Work in Process Inventory?a. 1,250b. 3,000c. 3,500d. 5,750
ANS: DBeginning Work in Process 4,500Add: Units Started 13,000
54. Roache Company uses a weighted average process costing system. Material is added at the start of production. Roache Company started 14,000 units into production and had 5,000 units in process at the start of the period that were 75 percent complete as to conversion costs. If Roache Company transferred out 12,250 units, how many units were in ending Work in Process Inventory?a. 1,750b. 3,000c. 5,500d. 6,750
ANS: DBeginning Work in Process 5,000Add: Units Started 14,000
55. Jones Company uses a weighted average process costing system and started 30,000 units this month. Jones had 12,000 units that were 20 percent complete as to conversion costs in beginning Work in Process Inventory and 3,000 units that were 40 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?a. 37,800b. 40,200c. 40,800d. 42,000
ANS: BBeginning Work in Process 12,000 20% 2,400+ Completion of Units in Process 12,000 80% 9,600
56. Summers Company uses a weighted average process costing system and started 36,000 units this month. Jones had 15,000 units that were 25 percent complete as to conversion costs in beginning Work in Process Inventory and 6,000 units that were 35 percent complete as to conversion costs in ending Work in Process Inventory. What are equivalent units for conversion costs?a. 43,350b. 47,100c. 48,900d. 51,000
ANS: BBeginning Work in Process 15,000 25% 3,750+ Completion of Units in Process 15,000 75% 11,250
57. Weston Company makes small metal containers. The company began April with 250 containers in process that were 30 percent complete as to material and 40 percent complete as to conversion costs. During the month, 5,000 containers were started. At month end, 1,700 containers were still in process (45 percent complete as to material and 80 percent complete as to conversion costs). Using the weighted average method, what are the equivalent units for conversion costs?a. 3,450b. 4,560c. 4,610d. 4,910
Chapter 6 15
ANS: DBeginning Work in Process 250 40% 100+ Completion of Units in Process 250 60% 150
58. Meade Company makes small metal containers. The company began October with 300 containers in process that were 35 percent complete as to material and 45 percent complete as to conversion costs. During the month, 6,000 containers were started. At month end, 1,900 containers were still in process (40 percent complete as to material and 75 percent complete as to conversion costs). Using the weighted average method, what are the equivalent units for conversion costs?a. 4,265b. 5,590c. 5,825d. 6,300
ANS: CBeginning Work in Process 300 45% 135+ Completion of Units in Process 300 55% 165+ Units Started and Completed 4,100 100% 4,100
59. Ormandy Company uses a FIFO process costing system. The company had 5,000 units that were 60 percent complete as to conversion costs at the beginning of the month. The company started 22,000 units this period and had 7,000 units in ending Work in Process Inventory that were 35 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?a. 18,000b. 22,000c. 25,000d. 27,000
ANS: BThe material is added at the beginning of the process; therefore there are 22,000 equivalent units of material.
60. Bernstein Company uses a FIFO process costing system. The company had 6,000 units that were 75 percent complete as to conversion costs at the beginning of the month. The company started 25,000 units this period and had 8,000 units in ending Work in Process Inventory that were 40 percent complete as to conversion costs. What are equivalent units for material, if material is added at the beginning of the process?
Chapter 6 16
a. 18,500b. 25,000c. 26,500d. 31,000
ANS: BThe material is added at the beginning of the process; therefore there are 25,000 equivalent units of material.
61. Montgomery Company makes fabric-covered hatboxes. The company began July with 500 boxes in process that were 100 percent complete as to cardboard, 80 percent complete as to cloth, and 60 percent complete as to conversion costs. During the month, 3,300 boxes were started. On April 30, 350 boxes were in process (100 percent complete as to cardboard, 70 percent complete as to cloth, and 55 percent complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?a. 3,295b. 3,395c. 3,450d. 3,595
ANS: ABeginning Work in Process (Ignored for FIFO) 500 0% -+ Completion of Units in Process 500 20% 100
62. Hahn Company makes fabric-covered storage totes. The company began July with 600 totes in process that were 100 percent complete as to cardboard, 75 percent complete as to cloth, and 65 percent complete as to conversion costs. During the month, 3,600 totes were started. On April 30, 450 totes were in process (100 percent complete as to cardboard, 60 percent complete as to cloth, and 50 percent complete as to conversion costs). Using the FIFO method, what are equivalent units for cloth?a. 3,570b. 3,750c. 3,870d. 4,020
ANS: ABeginning Work in Process (Ignored for FIFO) 600 0% -+ Completion of Units in Process 600 25% 150
64. Refer to Brewer Corporation. Assume that weighted average process costing is used. What is the cost per equivalent unit for material?a. $0.55b. $1.05c. $1.31d. $1.83
65. Refer to Brewer Corporation. Assume that FIFO process costing is used. What is the cost per equivalent unit for conversion?a. $3.44b. $4.24c. $5.71d. $7.03
ANS: BConversion Costs:
Beginning (Ignored for FIFO) $ -Current Period 76,956
67. Refer to Collins Corporation. Assume that weighted average process costing is used. What is the cost per equivalent unit for material?a. $0.99b. $1.18c. $1.64d. $1.73
68. Refer to Collins Corporation. Assume that FIFO process costing is used. What is the cost per equivalent unit for conversion?a. $3.05b. $3.87c. $4.25d. $6.40
ANS: BConversion Costs:
Beginning (Ignored for FIFO) $ -Current Period 80,845
The Fantastic Decorations Corporation makes wreaths in two departments: Forming and Decorating. Forming began the month with 500 wreaths in process that were 100 percent complete as to material and 40 percent complete as to conversion. During the month, 6,500 wreaths were started. At month end, Forming had 2,100 wreaths that were still in process that were 100 percent complete as to material and 50 percent complete as to conversion. Assume Forming uses the weighted average method of process costing. Costs in the Forming Department are as follows:
Beginning Work in Process Costs:Material $1,000
Conversion 1,500
Current Costs:Material $3,200
Conversion 5,045
The Decorating Department had 600 wreaths in process at the beginning of the month that were 80 percent complete as to material and 90 percent complete as to conversion. The department had 300 units in ending Work in Process that were 50 percent complete as to material and 75 percent complete as to conversion. Decorating uses the FIFO method of process costing, and costs associated with Decorating are:
Beginning WIP Inventory:Transferred In $1,170
Material 4,320
Conversion 6,210
Current Period:Transferred In ?
Material $67,745
Conversion 95,820
69. Refer to Fantastic Decorations Corporation. How many units were transferred to Decorating during the month?a. 600b. 4,900c. 5,950d. 7,000
ANS: BWreaths completed from BWIP 500Wreaths started and completed 4,400
71. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units as to costs in Decorating for the transferred-in cost component.a. 7,400b. 7,700c. 8,000d. 8,600
ANS: CThe transferred-in cost component is the 8,000 units that were transferred in.
72. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating for material.a. 7,970b. 8,000c. 8,330d. 8,450
ANS: AMaterials: Decorating: FIFO Units % Complete Eqiv. UnitsBeginning Work in Process 600 20% 120+ Units Started and Completed 7,700 100% 7,700+ Ending Work in Process 300 50% 150Equivalent Units of Production 7,970
73. Refer to Fantastic Decorations Corporation. Assume 8,000 units were transferred to Decorating. Compute the number of equivalent units in Decorating for conversion.a. 7,925b. 7,985c. 8,360d. 8,465
Chapter 6 22
ANS: BConversion: Decorating: FIFO Units % Complete Equiv.
Units
Beginning Work in Process 600 10% 60
+ Units Started and Completed 7,700 100% 7,700
+ Ending Work in Process 300 75% 225Equivalent Units of Production 7,985
74. Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a total cost of $16,000. What is the material cost per equivalent unit in Decorating?a. $8.50b. $8.65c. $8.80d. $9.04
ANS: AWhen FIFO is used, consider only current costs.
75. Refer to Fantastic Decorations Corporation. Assume that 8,000 units were transferred to Decorating at a total cost of $16,000. What is the conversion cost per equivalent unit in Decorating?a. $11.32b. $11.46c. $12.00d. $12.78
ANS: CWhen FIFO is used, consider only current costs.
76. Refer to Fantastic Decorations Corporation. Assume the material cost per EUP is $8.00 and the conversion cost per EUP is $15 in Decorating. What is the cost of completing the units in beginning inventory?a. $ 960b. $ 1,380c. $ 1,860d. $11,940
78. Refer to Four Seasons Company. Calculate equivalent units of production for material using FIFO.a. 32,000b. 36,800c. 37,125d. 39,000
Chapter 6 24
ANS: AMaterials are added at the beginning of the process. 32,000 units were started in the current period; therefore there are 32,000 equivalent units for materials.
87. Refer to Simpson Company. What are the equivalent units for conversion using the weighted average method?a. 120,000b. 123,440c. 128,360d. 130,000
Chapter 6 27
ANS: CBeginning Work in Process 10,000 45% 4,500+ Completion of Units in Process 10,000 55% 5,500+ Units Started and Completed 111,800 100% 111,800+ Ending Work in Process 8,200 80% 6,560Equivalent Units of Production 128,360
88. Refer to Simpson Company. What are the equivalent units for conversion using the FIFO method?a. 118,360b. 122,860c. 123,860d. 128,360
ANS: CBeginning Work in Process (ignored) 10,000 0% -+ Completion of Units in Process 10,000 55% 5,500+ Units Started and Completed 111,800 100% 111,800+ Ending Work in Process 8,200 80% 6,560Equivalent Units of Production 123,860
Beginning inventory (30% complete as to Material B and 60% complete for conversion)
700 units
Started this cycle 2,000 unitsEnding inventory (50% complete as to Material B and 80% complete for conversion)
500 units
Beginning inventory costs:Material A $14,270
Material B 5,950
Conversion 5,640
Current Period costs:Material A $40,000
Material B 70,000
Conversion 98,100
Material A is added at the start of production, while Material B is added uniformly throughout the process.
94. Refer to Mercury Corporation. Assuming a weighted average method of process costing, compute EUP units for Materials A and B.a. 2,700 and 2,280, respectivelyb. 2,700 and 2,450, respectivelyc. 2,000 and 2,240, respectivelyd. 2,240 and 2,700, respectively
ANS: BWeighted Average Material A Material BBeginning Work in Process 700 700Units Started and Completed 1,500 1,500Ending Work in Process 500 250
95. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute EUP units for Materials A and B.a. 2,700 and 2,280, respectivelyb. 2,700 and 2,450, respectivelyc. 2,000 and 2,240, respectivelyd. 2,450 and 2,880, respectively
ANS: CFIFO Material A Material BBeginning Work in Process 0 490Units Started and Completed 1,500 1,500Ending Work in Process 500 250 EUP Materials 2,000 2,240
98. Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the average cost per unit for Material A.a. $20.10b. $20.00c. $31.25d. $31.00
99. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material A.a. $31.25b. $20.10c. $20.00d. $31.00
100. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for Material B.a. $20.10b. $31.25c. $20.00d. $31.00
ANS: BMaterial B Costs(Current Period) Equivalent Units Average Cost per EUP
101. Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the average cost per EUP for Material B.a. $20.00b. $31.25c. $20.10d. $31.00
ANS: DMaterial B Costs
(Beginning Inventory and Current Period) Equivalent Units Average Cost per EUP$75,950 2,450 $31.00
102. Refer to Mercury Corporation Assuming a FIFO method of process costing, compute the average cost per EUP for conversion.a. $45.50b. $45.00c. $43.03d. $47.59
103. Refer to Mercury Corporation Assuming a weighted average method of process costing, compute the average cost per EUP for conversion.a. $39.90b. $45.00c. $43.03d. $47.59
ANS: AConversion Costs
(Beginning WIP and Current Period) Equivalent Units Average Cost per EUP
The following information is available for Guthrie Corporation for the current year:
Beginning Work in Process Costs of Beginning Work in Process: (75% complete) 14,500 units Material $25,100
Started 75,000 units Conversion 50,000
Ending Work in Process Current Costs: (60% complete) 16,000 units Material $120,000
Abnormal spoilage 2,500 units Conversion 300,000
Normal spoilage (continuous)
5,000 units
Transferred out 66,000 units
All materials are added at the start of production.
104. Refer to Guthrie Corporation. Using weighted average, what are equivalent units for material?a. 82,000b. 89,500c. 84,500d. 70,000
ANS: CMaterials: Weighted Average Units % Complete Eq. UnitsBeginning Work in Process 14,500 100% 14,500+ Units Started and Completed 51,500 100% 51,500+ Ending Work in Process 16,000 100% 16,000+ Abnormal Spoilage 2,500 100% 2,500
105. Refer to Guthrie Corporation. Using weighted average, what are equivalent units for conversion costs?a. 80,600b. 78,100c. 83,100d. 75,600
ANS: BConversion: Weighted Average Units % Complete Eq UnitsBeginning Work in Process 14,500 100% 14,500+ Units Started and Completed 51,500 100% 51,500+ Ending Work in Process 16,000 60% 9,600+ Abnormal Spoilage 2,500 100% 2,500
108. Refer to Guthrie Corporation. What is the cost assigned to normal spoilage using weighted average?a. $31,000b. $15,500c. $30,850d. None of the responses are correct
ANS: DNo costs are assigned to normal, continuous spoilage. Higher costs are assigned to good units produced.
109. Refer to Guthrie Corporation. Assume that the cost per EUP for material and conversion are $1.75 and $4.55, respectively. What is the cost assigned to ending Work in Process?a. $100,800b. $87,430c. $103,180d. $71,680
ANS: DEquivalent
UnitsCost per
Equivalent Unit Total16,000 $1.75 $28,000 9,600 $4.55 $43,680
110. Refer to Guthrie Corporation. Using FIFO, what are equivalent units for material?a. 75,000b. 72,500c. 84,500d. 70,000
ANS: DMaterials: FIFOBeginning Work in Process - 0% -+ Units Started and Completed 51,500 100% 51,500+ Ending Work in Process 16,000 100% 16,000+ Abnormal Spoilage 2,500 100% 2,500
111. Refer to Guthrie Corporation. Using FIFO, what are equivalent units for conversion costs?a. 72,225b. 67,225c. 69,725d. 78,100
Chapter 6 35
ANS: BConversion: FIFOBeginning Work in Process 14,500 25% 3,625+ Units Started and Completed 51,500 100% 51,500+ Ending Work in Process 16,000 60% 9,600+ Abnormal Spoilage 2,500 100% 2,500
114. Refer to Guthrie Corporation. Assume that the FIFO EUP cost for material and conversion are $1.50 and $4.75, respectively. Using FIFO what is the total cost assigned to the units transferred out?a. $414,194b. $339,094c. $445,444d. $396,975
ANS: ATransferred Out Units: FIFO Equiv
UnitsCost per
Equiv UnitTotal
Beginning Work in Process 75,100+ Completion of Beginning Inventory (14,500 * 25%) 3,625 4.75 17,219+Units Started and Completed 51,500 6.25 321,875
Crafton Corporation has the following information for the current month:
Units started 100,000 unitsBeginning Work in Process: (35% complete) 20,000 unitsNormal spoilage (discrete) 3,500 unitsAbnormal spoilage 5,000 unitsEnding Work in Process: (70% complete) 14,500 unitsTransferred out 97,000 unitsBeginning Work in Process Costs:
Material $15,000
Conversion 10,000
All materials are added at the start of the production process. Crafton Corporation inspects goods at 75 percent completion as to conversion.
115. Refer to Crafton Corporation. What are equivalent units of production for material, assuming FIFO?a. 100,000b. 96,500c. 95,000d. 120,000
ANS: AMaterials: FIFOBeginning Work in Process - 0% -+ Units Started and Completed 77,000 100% 77,000+ Normal Spoilage--Discrete 3,500 100% 3,500+ Abnormal Spoilage 5,000 100% 5,000+ Ending Work in Process 14,500 100% 14,500
116. Refer to Crafton Corporation. What are equivalent units of production for conversion costs, assuming FIFO?a. 108,900b. 103,900c. 108,650d. 106,525
ANS: DConversion: FIFOBeginning Work in Process 20,000 65% 13,000+ Units Started and Completed 77,000 100% 77,000+Normal Spoilage--Discrete 3,500 75% 2,625+ Abnormal Spoilage 5,000 75% 3,750+ Ending Work in Process 14,500 70% 10,150
117. Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. What is the amount of the period cost for July using FIFO?a. $0b. $9,375c. $10,625d. $12,500
ANS: CAbnormal spoilage is a period cost.Materials 5,000 * $1.00/unit $5,000Conversion Costs 3,750 * $1.50/unit 5,625 Total Abnormal Spoilage $10,625
118. Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?a. $245,750b. $244,438c. $237,000d. $224,938
ANS: BTransferred Out Units: FIFOBeginning Work in Process $ 25,000+ Completion of Beginning Inventory (20,000 * 65%) 13,000 1.50 19,500+ Units Started and Completed 77,000 2.50 192,500+Normal Spoilage--Discrete-Materials 3,500 1.00 3,500+Normal Spoilage--Discrete-Conversion 2,625 1.50 3,938Equivalent Units of Production $244,438
119. Refer to Crafton Corporation. What are equivalent units of production for material assuming weighted average is used?a. 107,000b. 116,500c. 120,000d. 115,000
Chapter 6 38
ANS: CMaterials: Weighted AverageBeginning Work in Process 20,000 100% 20,000+ Units Started and Completed 77,000 100% 77,000+ Normal Spoilage--Discrete 3,500 100% 3,500+ Abnormal Spoilage 5,000 100% 5,000+ Ending Work in Process 14,500 100% 14,500
120. Refer to Crafton Corporation. What are equivalent units of production for conversion costs assuming weighted average is used?a. 113,525b. 114,400c. 114,775d. 115,650
ANS: AConversion: Weighted AverageBeginning Work in Process 20,000 100% 20,000+ Units Started and Completed 77,000 100% 77,000+Normal Spoilage--Discrete 3,500 75% 2,625+ Abnormal Spoilage 5,000 75% 3,750+ Ending Work in Process 14,500 70% 10,150
121. Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. What is the cost assigned to normal spoilage, using weighted average, and where is it assigned?
Value Assigned To
a. $7,438 Units transferred out and Ending Inventoryb. $7,438 Units transferred outc. $8,750 Units transferred out and Ending Inventoryd. $8,750 Units transferred out
ANS: B
Equivalent UnitsCost per
Equivalent Unit Total3,500 $1.00 $3,5002,625 $1.50 3,938
122. Refer to Crafton Corporation. Assume that the costs per EUP for material and conversion are $1.00 and $1.50, respectively. Assuming that weighted average is used, what is the cost assigned to ending inventory?a. $29,725.00b. $37,162.50c. $38,475.00d. $36,250.00
Knight Corporation has the following information for the current month:
Units started 95,000 unitsBeginning Work in Process: (30% complete) 15,000 unitsNormal spoilage (discrete) 3,000 unitsAbnormal spoilage 4,000 unitsEnding Work in Process: (75% complete) 15,000 unitsTransferred out 88,000 unitsBeginning Work in Process Costs:
Material $18,000
Conversion 14,000
All materials are added at the start of the production process. Knight Corporation inspects goods at 75 percent completion as to conversion.
123. Refer to Knight Corporation. What are equivalent units of production for material, assuming FIFO?a. 91,000b. 92,000c. 95,000d. 110,000
ANS: CMaterials: FIFOBeginning Work in Process - 0% -+ Units Started and Completed 73,000 100% 73,000+ Normal Spoilage--Discrete 3,000 100% 3,000+ Abnormal Spoilage 4,000 100% 4,000+ Ending Work in Process 15,000 100% 15,000
124. Refer to Knight Corporation. What are equivalent units of production for conversion costs, assuming FIFO?a. 97,750b. 100,000c. 101,750d. 104,500
ANS: BConversion: FIFOBeginning Work in Process 15,000 70% 10,500+ Units Started and Completed 73,000 100% 73,000+Normal Spoilage--Discrete 3,000 75% 2,250+ Abnormal Spoilage 4,000 75% 3,000+ Ending Work in Process 15,000 75% 11,250
125. Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. What is the amount of the period cost for July using FIFO?a. $0b. $12,750c. $14,750d. $17,000
ANS: CAbnormal spoilage is a period cost.Materials 4,000 * $2.00/unit $ 8,000Conversion Costs 3,000 * $2.25/unit 6,750 Total Abnormal Spoilage $14,750
126. Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. Using FIFO, what is the total cost assigned to the transferred-out units (rounded to the nearest dollar)?a. $344,938b. $365,875c. $376,938d. $378,625
ANS: CTransferred Out Units: FIFOBeginning Work in Process $ 32,000+ Completion of Beginning Inventory (15,000 * 70%) 10,500 $2.25 23,625+ Units Started and Completed 73,000 4.25 310,250+Normal Spoilage--Discrete-Materials 3,000 2.00 6,000+Normal Spoilage--Discrete-Conversion (3,000 * 75%) 2,250 2.25 5,063Total Costs Assigned to Transferred Units $376,938
127. Refer to Knight Corporation. What are equivalent units of production for material assuming weighted average is used?a. 105,500b. 106,000c. 107,000d. 110,000
ANS: DMaterials: Weighted AverageBeginning Work in Process 15,000 100% 15,000+ Units Started and Completed 73,000 100% 73,000+ Normal Spoilage--Discrete 3,000 100% 3,000+ Abnormal Spoilage 4,000 100% 4,000+ Ending Work in Process 15,000 100% 15,000
128. Refer to Knight Corporation. What are equivalent units of production for conversion costs assuming weighted average is used?a. 103,750b. 104,500c. 104,750d. 105,500
ANS: BConversion: Weighted AverageBeginning Work in Process 15,000 100% 15,000+ Units Started and Completed 73,000 100% 73,000+Normal Spoilage--Discrete 3,000 75% 2,250+ Abnormal Spoilage 4,000 75% 3,000+ Ending Work in Process 15,000 75% 11,250
129. Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. What is the cost assigned to normal spoilage, using weighted average, and where is it assigned?
Value Assigned To
a. $11,063 Units transferred out and Ending Inventoryb. $11,063 Units transferred outc. $12,750 Units transferred out and Ending Inventoryd. $12,750 Units transferred out
Chapter 6 42
ANS: BEquivalent
UnitsCost per
Equivalent Unit Total3,000 $2.00 $6,0002,250 $2.25 5,063
130. Refer to Knight Corporation. Assume that the costs per EUP for material and conversion are $2.00 and $2.25, respectively. Assuming that weighted average is used, what is the cost assigned to ending inventory?a. $55,312.50b. $63,750.00c. $66,375.00d. $72,312.50
(70% complete) 13,000 unitsTransferred out 72,500 units
Beginning Work in Process Costs:Material $10,400
Conversion 13,800
Current Costs:Material $120,000
Conversion 350,000
All materials are added at the start of production and the inspection point is at the end of the process.
Chapter 6 43
131. Refer to Chapman Corporation. What are equivalent units of production for material using FIFO?a. 80,000b. 79,100c. 78,900d. 87,500
ANS: AMaterials: FIFO
Beginning Work in Process-
0% -+ Units Started and Completed 65,000 100% 65,000+ Ending Work in Process 13,000 100% 13,000+ Normal Spoilage (discrete) 1,100 100% 1,100+ Abnormal Spoilage 900 100% 900Equivalent Units of Production 80,000
132. Refer to Chapman Corporation. What are equivalent units of production for conversion costs using FIFO?a. 79,700b. 79,500c. 81,100d. 80,600
ANS: DConversion: FIFO
Units% Complete
EUP
Beginning Work in Process 7,500 60% 4,500+ Units Started and Completed 65,000 100% 65,000+ Ending Work in Process 13,000 70% 9,100+ Normal Spoilage (discrete) 1,100 100% 1,100+ Abnormal Spoilage 900 100% 900
133. Refer to Chapman Corporation. What are equivalent units of production for material using weighted average?a. 86,600b. 87,500c. 86,400d. 85,500
ANS: BMaterials: Weighted Average Units % Complete EUP
Beginning Work in Process 7,500 100% 7,500+ Units Started and Completed 65,000 100% 65,000+ Ending Work in Process 13,000 100% 13,000+ Normal Spoilage (discrete) 1,100 100% 1,100+ Abnormal Spoilage 900 100% 900
134. Refer to Chapman Corporation. What are equivalent units of production for conversion costs using weighted average?a. 83,600b. 82,700c. 82,500d. 81,600
ANS: AConversion: FIFO Units % Complete EUP
Beginning Work in Process 7,500 100% 7,500+ Units Started and Completed 65,000 100% 65,000+ Ending Work in Process 13,000 70% 9,100+ Normal Spoilage (discrete) 1,100 100% 1,100+ Abnormal Spoilage 900 100% 900
141. Refer to Chapman Corporation. What is the cost assigned to normal spoilage and how is it classified using weighted average?a. $6,193 allocated between WIP and Transferred Outb. $6,424 allocated between WIP and Transferred Outc. $6,193 assigned to loss accountd. $6,424 assigned to units Transferred Out
ANS: DNormal
Spoiled Units Price per Equivalent Unit Total1,100 $5.84 $6,424 Transferred Out
142. Refer to Chapman Corporation. What is the total cost assigned to goods transferred out using weighted average?a. $435,080b. $429,824c. $428,656d. $423,400
ANS: BGoods Transferred Out/ Price per Eq Unit Total